The contest is Government can get cheap source of fund at below 2.5% in the open market given Singapore’s credit rating.
Authorities may say that they can borrow at below the existing 2.4 to 2.5% CPF rate. Some may agree with the Government given Singapore’s strong credit ratings.
This is especially in the case where Singapore borrows only 10% of 20% of GDP.
But what is unclear is if Government were to borrow 100% of our GDP (Our existing debt levels), the credit ratings of Singapore will quickly fall, leading to very high borrowing rates.
In fact, it is not new to commoners that Singapore and Japan enjoys reasonable credit rating because the national debt is internal. One would argue that local Japanese and Singaporeans will not exit Japan and Singapore respectively, immediately.Polices can also be put in place to guard the exit.
As such, it may be unfair for Government to claim that CPF is not providing a cheap source of funds.